UPI Directors Keep Survival Strategy Secret

WASHINGTON — The new managers of beleaguered United Press International, meeting for the first time with union workers Monday, said they must do a better job of matching the wire service's product to a changing industry's needs if they are to right a company that is now losing more than $1 million a month.

The new UPI directors, who assumed control of the company Friday through a $55-million deal with owner Mario Vazquez Rana, pledged at a news conference to commit the millions of dollars needed to keep the operation afloat. But they remained tight-lipped on specific strategies.

For the time being, new UPI President Paul Steinle said he will institute a "freeze" on hiring and firing, as well as on cuts and expansions, at the wire service's 180 worldwide bureaus. Steinle, a former broadcast journalist, said that he plans to retain the current editors for now.

Praising the staff for its integrity under trying work conditions, Steinle said after the press conference: "I have no plans to commence a shake-up, but I don't know them (the current editors) well enough to have confidence yet."

Dissension within the editorial ranks has been just one of many problems in recent years to rock the news gathering service that E. W. Scripps founded in 1907.

The company faced bankruptcy when Vazquez Rana, a Mexican publisher, bought it for $41 million in 1986. In the wake of cutbacks and sagging morale, its three top editors left in protest late last year--and are now being sued by UPI because of their remarks at the time. The wire service also has lost some of its biggest customers.

Some see UPI's credibility as too damaged for the wire service to recover.

"Quite frankly, the problem at UPI today is that it's a second, duplicate wire to AP (Associated Press) and, so long as that's true, they can't profit," said John Morton, a leading media analyst in Washington.

Under the agreement reached Friday, Vazquez Rana retained his shares in UPI but sold a 10-year irrevocable proxy for total control of the company's operations to Washington-based investors organized as the WNW Group. The new managers expect to bring in more investors, eventually cutting Vazquez Rana's stake in the firm to a minority interest.

While the new investors may be able to use UPI's resources to complement their other communications industry interests, Morton said he doubts that even a specialized emphasis for the wire service can turn a profit. "Wherever they turn--business, international, wherever--there are already entrenched competitors, formidable obstacles."

UPI Executive Editor Al Rossiter Jr. said the management change offers the wire service "a bright future" and has boosted morale, but he conceded: "It's not going to be an easy road."

Dan Carmichael, spokesman for the Wire Service Guild, which represents union employees, said the transfer of control has not boosted morale at the wire service as workers are waiting to gauge the effects. Union leaders presented the new management with a set of requests on reviewing the transfer agreement, wages and regulations, but got no commitment from Steinle, he said.

But Dr. Earl W. Brian, a one-time California politician who now heads the investment group controlling UPI, acknowledged "a possibility"--a slight one, in his view--that the new managers would not be able to salvage the wire service. It is now losing "a million-plus a month," he said. The agreement with Vazquez Rana leaves open the possibility of a reduction in payments, contingent on the new managers' review of UPI's financial state, Brian said.

A 15-member team with diverse backgrounds will study UPI's resources and seek out newspaper executives to find out what they want from the wire service, Steinle and Brian said. They expect a plan to be formulated within six weeks.

As UPI has teetered on the brink of financial collapse in past years, the company has not paid enough attention to matching the wire service's product with the needs of the industry and a changing technology, Steinle said after the news conference. "No one ever sat down and said, 'How do all these things fit?' "

Brian said it is "premature" to discuss speculation that the wire service may have to specialize its coverage or adopt other drastic strategies to survive economically.